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Gulf Union, Al Ahlia ink MoU on potential merger

Gulf Union, Al Ahlia ink MoU on potential merger
The purpose of the deal is to begin financial, legal, and actuarial due diligence
GULF UNION ALAHLIA
8120
-0.79% 12.56 -0.10
ALAHLIA
8140
1.10% 14.76 0.16

Riyadh – Mubasher: Gulf Union Cooperative Insurance signed a non-binding memorandum of understanding (MoU) with Al Ahlia for Cooperative Insurance on Tuesday.

The purpose of the deal is to begin financial, legal, and actuarial due diligence and continue the non-binding negotiations relating to the detailed terms of the proposed merger between the two companies, according to a bourse filing on Wednesday.

In case the proposed merger occurred, it will be implemented by way of an exchange of shares and Al Ahlia will become a subsidiary of the Gulf Union. 

Under the terms of the proposed merger, Gulf Union will issue 0.5625 new shares for every issued share in Al Ahlia.

Accordingly, Gulf Union will issue 9 million new shares in exchange for all issued shares of Al Ahlia.

The signing of the MoU comes as a result of the preliminary conclusions of the studies and negotiations in relation to the proposed merger which indicate that it is expected to be a positive transformational step in the business of the company and improving its positioning in the Saudi insurance sector, the statement said.

The statement highlighted that the MoU does not constitute an offer by Gulf Union to the company’s shareholders or to its board, nor does it constitute an announcement of a firm intention to make an offer.

The two companies intend to finish their evaluation of the proposed merger with the intention to sign the agreement in the first half of 2018.

The merger will be subject to various conditions and approvals including, but without limitation, the approval of the Saudi Arabian Monetary Authority (SAMA), the Capital Markets Authority (CMA), the approval of the Council for Competition Protection, the approval of the general assembly of each company, and the approval of the relevant Saudi Arabian regulatory authorities.

Al Ahlia has appointed Wasatah Capital as its financial advisor, and Shearman & Sterling LLP in association with Dr. Sultan Almasoud & Partners as its legal advisor.

On the other hand, Gulf Union has appointed Saudi Kuwaiti Finance House as its financial advisor, and Al-Enezee in association with Holman Fenwick Willan LLP as its legal advisor.